Highlights
- Majority of homes are under-insured.
- Being under-insured can lead to consequences such as property value going down and, claims only partially paid for.
- The contents of a house can be included in home insurance.
'May PERAan' is SBS Filipino's podcast series which features financial experts seeking to answer the most common questions about money and finances.
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"83% of homes in Australia are under-insured. This is due to the high costs of building materials and labour, which have risen from 30-50% from the past year," insurance broker Richard Labrador shares.
With 83% of homes being under-insured, what potential issues do majority of homeowners face?
Why you need adequate insurance
"When you borrow money from the bank, you have to insure your home because the bank has interest in it," Richard shares.
Aside from the bank's interest in your home, adequate insurance speaks of, more importantly, your interest in it.
"I can't think of any pros when it comes to under-insuring your home.
"If the house is a total loss and there isn't enough coverage, the house cannot be rebuilt to how it was before. The property value will go down.
"If your house is a partial loss, the clause in your insurance may apply. The clause states that the insurance company won’t pay for the whole claim. This is the penalty if your property is not properly insured."
Richard says that premiums can be lowered by increasing the excess of your property.
"Usually I tell my clients to have $1,000-$1,500 in excess in the event that they have a building claim."
Covers to consider
Richard says that along with the building, its contents can also be insured.
"If your house burns down, its contents will burn down as well; so contents can definitely be insured. It’s actually my recommendation that you insure them."
He also suggests to look into other covers such as accidental damage and listed events.
"Get coverage for accidental damage, especially if you have young children.
"Listed events cover bushfires, storm, hail and, water damage. They are typically cheaper than accidental damage."
